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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 40.49 | ACUITE BBB- | Stable | Assigned | - |
| Bank Loan Ratings | 40.00 | ACUITE BBB- | Stable | Reaffirmed | - |
| Total Outstanding | 80.49 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B Minus) on the Rs. 40.00 crore bank facilities of Mulamoottil Financers Limited (MFL). The outlook is ‘Stable’. Acuité has assigned the long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B Minus) on the Rs. 40.49 crore bank facilities of Mulamoottil Financers Limited (MFL). The outlook is ‘Stable’. Rationale for the rating The rating continues to factor in the experienced promoters, healthy asset quality and comfortable capitalization levels. MFL’s reported a CRAR of 35.24 percent (Tier 1: 23.12 percent) and gearing levels stood at 3.55 times as on November 30, 2023. The rating takes into consideration in the company’s lending profile towards secured and liquid gold loans & improvement in disbursal levels. The rating further draws comfort from sound asset quality metrics marked by on time portfolio at 99.26 percent and Gross Non-Performing Assets (GNPA) of 0.27 percent as on November 30, 2023. The rating is however, constrained by geographical concentration, modest scale of operations, limited financial flexibility and highly competitive business of gold loans. Going forward, the company’s ability to raise capital, profitably scale-up its loan portfolio while maintaining the asset quality will be a key monitorable. |
| About the company |
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Mulamoottil Financiers Limited (Formerly Mulamoottil Leaning and Hire Purchase Ltd) a Non- Banking Financial Company (NBFC) incorporated in February 1994 based out of central Travancore area of Kerala mainly operates in providing gold loan and business loans primarily to individuals in rural areas. The company is being promoted by Mr. Jacob Thomas and his family members. The company has expanded its operations in the state of Kerala with a network of 176 branches.
MFL is a part of the Mulamoottil Group, the group is also engaged in other businesses like hospitality, finance, retail amongst others. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone financial and business risk profile of MFL to arrive at the rating. |
| Key Rating Drivers |
| Strength |
The promoters have more than two decades of experience and a strong understanding of customer profile in the region they operate. Given the company’s long track record of presence of more than three decades in the state of Kerala, the company has built up good credibility among the borrowers. The company is promoted by Mr. Jacob Thomas and his family members. He holds ~69 percent of shares individually of MFL as on March 31, 2023, while rest shareholding is held by other family members. Mr. Jacob Thomas, the manging director of the company has long-standing experience in various business & also in financial services. The day-to-day operation of MFL is led by Dr.Ashly Thomas Jacob who is supported by his team of professionals.
Asset quality has shown improvement marked by on time portfolio at 99.26 percent as on November 30, 2023. MFL reported a Gross NPA stood at 0.27 percent as on November 30, 2023 as against 0.33 percent as on March 31, 2023, and NNPA of 0.14 percent as on November, 2023 as against 0.17 percent as on March 31, 2023. The company has provision coverage ratio of 50 percent as on November 30, 2023.The improvement was led by the management’s focus on collection toward delinquent assets. Going forward, the company’s ability to maintain asset quality will be key monitorable and risk arising from adverse gold prices would be critical. |
| Weakness |
| Moderate scale of Operations with high geographical concentration
Mulamoottil Financers limited commenced its operation in 1994 and currently has a loan portfolio of Rs. 184.03 Cr. as on Novemeber 30, 2023 as against Rs. 149.97 Cr as on March 31, 2023, and Rs. 104.80 Cr in FY2021. MFL is a mid-sized but a stable growing player in gold loans. MFL’s portfolio is currently concentrated in 5 districts of Kerala (i.e Pathanamthitta, Kottayam, Alappuzha, Kollam, Idukki) and has a branch base of 176 branches as on Novemeber 30, 2023. Going forward MFL plan to expand its network of branches in the neighbouring states of Kerala. The company's performance is expected to remain exposed to the competitive landscape in these regions and the occurrence of events such as natural calamities, which may adversely impact the credit profile of the borrowers. Limited Financial Flexibility The capital structure of MFL is supported by Networth of Rs. 48.35 Cr. ,Total debt of Rs. 161.32 Cr. and resulted gearing of~3.55 times as on November 30, 2023. MFL borrowing profile comprises non-convertible debentures followed by unsecured non-convertible subordinate debt and facilities from Federal bank and State Bank of India in the form of CC/OD, WCDL, Term Loan facilities. The NCDs are privately placed with friends and family of the promoters for a tenor of 2 to 3 years. As the company has availed banking facility from three banks, the debt profile of MFL remains largely dependent on promoters for funding requirement. The company is in talk with other banks for raising additional funds. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
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MFL’s overall liquidity profile remains adequate with no negative cumulative mismatches in near to medium term as per ALM dated November 30, 2023. The company has cash & bank balances of Rs. 14.67 Crore as of November 30, 2023.
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| Outlook- Stable |
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Acuité believes that MFL will maintain a 'Stable' outlook over the medium term supported by its established presence in the gold loan segment along with experienced promoters and demonstrated ability to maintain asset quality levels. The outlook may be revised to 'Positive' in case of higher than expected growth in loan portfolio while maintaining asset quality and capital structure. The outlook may be revised to 'Negative' in case of any headwinds faced in scaling up of operations or in case of significant deterioration in asset quality and profitability metrics.
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
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| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Complexity Level Of Financial Instruments: https://www.acuite.in/view-rating-criteria-55.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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